Americans now need at least $500K a year to enter top 1%
One definition of rich is getting into the top 1%. If that’s your goal, it’s becoming harder to reach.
The income needed to exit the bottom 99% of U.S. taxpayers hit $515,371 in 2017, according to IRS data released this week. That’s up 7.2% from a year earlier, even after adjusting for inflation.
Since 2011, when Occupy Wall Street protesters rallied under the slogan “We are the 99%,” the income threshold for the top 1% is up an inflation-adjusted 33%. That outpaces all other groups except for those that are even wealthier.
To join the top 0.1%, you would have needed to earn $2.4 million in 2017, an increase of 38% since 2011. The top 0.01% threshold has jumped 46%.
Meanwhile, the top 0.001% — an elite group of 1,433 taxpayers — earned at least $63.4 million each in 2017, up 51% since the Occupy protests.
The median taxpayer, at the 50th percentile, has seen income rise 20% since 2011.
Rising inequality is a top focus of the Democratic presidential campaign.
“We cannot afford to continue this level of income and wealth inequality,” Vermont Senator Bernie Sanders said during Tuesday’s debate. “We cannot afford a billionaire class, whose greed and corruption has been at war with the working families of this country for 45 years.”
Though the rich in the U.S. are doing well, they also pay the greatest share of taxes. The top 1% earned 21% of the country’s income, and paid 38.5% of federal individual income taxes. The top 1% paid a greater share of income tax to the U.S. Treasury than the bottom 90% combined (29.9%).
Working-class taxpayers do pay many other taxes, including federal payroll taxes for Social Security and Medicare, and state and local levies. However, the bottom half of the income distribution pays very little toward the federal income tax.
The top 50% — taxpayers with an adjusted gross income of $41,740 or more — paid 97% of taxes, and earned 89% of income reported to the IRS.
The income tax brings in about half of all federal revenues, according to the Congressional Budget Office.
Overall, the IRS data show the U.S. collected $1.6 trillion in income taxes from 143.3 million taxpayers reporting a total of $10.9 trillion in adjusted gross income in 2017, the most recent year available.
The IRS data don’t reflect the effects of the tax overhaul signed by President Donald Trump at the end of 2017. The law lowered individual income tax rates while eliminating many deductions and slashing the rate on U.S. corporations to 21% from 35%.
IRS data through 2017 largely show that average tax rates paid have increased in recent years.